Westpac Group has announced it is updating its consumer credit policy to use comprehensive credit reporting (CCR) information in the assessment of new home loan applications and loan increases.
In an update to brokers from the bank’s mortgage broking team, the group said the changes to its consumer credit policy are required to ensure it continues to apply responsible lending practices in assessing a customer’s ability to service existing and proposed debts.
Westpac’s updated policy was effective from 16 February.
The bank outlined the policy changes as well as the implications for brokers. The changes include:
- The use of CCR information to help verify an applicant’s liabilities and identify mismatches. Brokers can help by accessing their client’s credit report with their consent and raise any liability mismatches with the client immediately;
- Requiring brokers to discuss any recent enquiries from the last two months to see if the application proceeded;
- No longer requiring statements to verify certain liabilities where CCR information is listed on the credit report; and
- Using repayment history information as part of the lending decision.
If a credit decision on a pipeline application is run or re-run on or after 16 February once the new consumer credit policy comes into effect, then CCR information and policy changes will apply. This includes specific repayment history information rules for pipeline applications.
Westpac said it will continue to look at ways to improve the application experience as CCR matures.
Notional rent amendment
Elsewhere in the announcement, Westpac said effective from 18 February, where joint applicants in a de facto or spousal relationship have the residential status of rent/board or living with parents and will not be living in the property being purchased post-settlement, a notional rent value of $650 per month will be applied per couple to the serviceability assessment.
Previously, applications meeting the above notional rent criteria had the minimum rental outgo amount applied per applicant to the serviceability assessment.
ApplyOnline and the Assess Calculator will be updated to reflect the reduced notional rent value of $650 per couple per month.
Enhancements to the Assess Calculator
Westpac has made changes to the latest release of the Assess Calculator, version 20, based on broker feedback.
These changes include:
- Ability to copy customer declared expenses from one applicant to another where expenses are shared;
- Ability to copy self employed information from one applicant to another;
- Save Access calculations as a PDF using the new ‘Create PDF’ button;
- New “gross interest” field for self-employed income; and
- Enabled use of the “tab” and “enter” keys allowing users to navigate to the next field – “shift + tab” and “shift + enter” keys to move back.
Emergency services policy change
The major bank has introduced an emergency services credit policy, effective 18 February, as a complementary, optional policy to support emergency services front-line permanent employees to meet home loan serviceability.
“Currently we assess all non-base income at 80 per cent but with the new policy we will assess overtime and allowances at 100 per cent due to the consistent nature of overtime in these lines of work,” the bank said in its update.
Eligible applicants include active duty (front line) fire officers, firefighters, police officers, ambulance officers, ambulance paramedics and hospital employed nurses in permanent roles, held at the same employer for the current and previous financial year.
Non front-line employees, such as office-based emergency services staff, are ineligible.
The bank will use income that is the lower of the two financial years – the current financial year-to-date annualised or the previous financial year – to avoid credit decisions based on a period of unusually high overtime.
A new applicant type, “emergency services”, has been added in the new Assess Calculator.
When using the emergency services policy, brokers are being asked to:
- Manually compare last year’s total gross income figure from this employment (Group 2 document) with year-to-date (from latest payslip/s) annualised; and
- Enter the lower of the two values into the relevant income type in ApplyOnline.
Those needing assistance annualising the current year-to-date income can use the Assess Calculator on the broker website.